Government policy failure in public support for research and development

peer-reviewedPromoting Research and Development (R&D) and innovative activity is a key element of the EU Lisbon Agenda and is seen as playing a central part in stimulating economic development. In this paper we argue that, even allowing for benevolent policy-makers, informational asymmetries can lead to a misallocation of public support for R&D, hence government policy failure, with the potential to exacerbate preexisting market failures. Initially, we explore alternative allocation mechanisms for public support, which can help to minimize the scale of these government policy failures. Of these mechanisms (grants, tax credits, or allocation rules based on past performance), our results suggest that none is universally most efficient. Rather, the effectiveness of each allocation rule depends on the severity of financial constraints and on the level of innovative capabilities of the firms themselves.ACCEPTEDpeer-reviewe

Effort Perception is Made More Accurate with More Effort and When Cooperating with Slackers

Recent research on the conditions that facilitate cooperation is limited by a factor that has yet to be established: the accuracy of effort perception. Accuracy matters because the fitness of cooperative strategies depends not just on being able to perceive others' effort but to perceive their true effort. In an experiment using a novel effort-tracker methodology, we calculate the accuracy of human effort perceptions and show that accuracy is boosted by more absolute effort (regardless of relative effort) and when cooperating with a "slacker" rather than an "altruist". A formal model shows how such an effort-prober strategy is likely to be an adaptive solution because it gives would-be collaborators information on when to abort ventures that are not in their interest and opt for ones that are. This serves as a precautionary measure against systematic exploitation by extortionist strategies and a descent into uncooperativeness. As such, it is likely that humans have a bias to minimize mistakes in effort perception that would commit them to a disadvantageous effort-reward relationship. Overall we find support for the idea that humans have evolved smart effort detection systems that are made more accurate by those contexts most relevant for cooperative tasks

The all-pay-auction with complete information

In a (first price) all-pay auction, bidders simultaneously submit bids for an item. All players forfeit their bids, and the high bidder receives the item. This auction is widely used in economics to model rent seeking, R&D races, political contests, and job promotion tournaments. We fully characterize equilibrium for this class of games, and show that the set of equilibria is much larger than has been recognized in the literature. When there are more than two players, for instance, we show that even when the auction is symmetric there exists a continuum of asymmetric equilibria. Moreover, for economically important configurations of valuations, there is no revenue equivalence across the equilibria; asymmetric equilibria imply higher expected revenues than the symmetric equilibrium

Properties and Benefits of Calibrated Classifiers

A calibrated classifier provides reliable estimates of the true probability that each test sample is a member of the class of interest

Why cooperation is not running away

International audienceA growing number of experimental and theoretical studies show the importance of partner choice as a mechanism to promote the evolution of cooperation, especially in humans. In this paper, we focus on the question of the precise quantitative level of cooperation that should evolve under this mechanism. When individuals compete to be chosen by others, their level of investment in cooperation evolves towards higher values, a process called competitive altruism, or runaway cooperation. Using a classic adaptive dynamics model, we first show that, when the cost of changing partner is low, this runaway process can lead to a profitless escalation of cooperation. In the extreme, when partner choice is entirely frictionless, cooperation even increases up to a level where its cost entirely cancels out its benefit. That is, at evolutionary equilibrium, individuals gain the same payoff than if they had not cooperated at all. Second, importing models from matching theory in economics we, however, show that, when individuals can plastically modulate their choosiness in function of their own cooperation level, partner choice stops being a runaway competition to outbid others, and becomes a competition to form the most optimal partnerships. In this case, when the cost of changing partner tends toward zero, partner choice leads to the evolution of the socially optimum level of cooperation. This last result could explain the observation that human cooperation seems to be often constrained by considerations of social efficiency. This article is protected by copyright. All rights reserved